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Visa to Bar Transactions by Processor

Visa USA said yesterday that it would stop allowing the payment processor CardSystems Solutions to handle its transactions, months after the processor left the records of millions of cardholders at risk for fraud.

"CardSystems has not corrected, and cannot at this point correct, the failure to provide proper data security for those accounts," said Tim Murphy, Visa's senior vice president for operations in a memorandum sent to several banks. "Visa USA has decided that CardSystems should not continue to participate as an agent in the Visa system."

Cardholders and merchants should not be affected by the change.

Visa said its decision to remove CardSystems came after a review and an independent investigation found that the payment processor had improperly stored cardholder data and did not have the proper controls in place.

It is unclear if MasterCard and American Express will take similar action, but with Visa accounting for more than half of all card transactions, the move raises questions about the future of CardSystems.

"I've never heard of them booting off a processor," said Avivah Litan, a security analyst at Gartner Inc., a technology research group. "The worst thing that I've heard is a processor that had to cough up $1 million."

The move came at least two months after Visa first learned that data had been compromised and just days before its executives, along with those of other major card companies, have been called to testify in Washington about their security practices. The chief executive of CardSystems, John M. Perry, is also expected to testify on Thursday.

In a statement released yesterday, CardSystems said Visa's decision was unexpected and upsetting. "We are disappointed and very surprised that Visa has decided to take this action today, not only because of the impact that it will have on our employees, but the disruption that it will cause to our 110,000 merchant customers," the processor said in a statement. "We hope that Visa will reconsider."

Visa has given at least 11 banks, which hired CardSystems to handle the merchant transactions, until the end of October to change processors, the memo said. Until then, CardSystems will be allowed to process Visa transactions as long as it has corrected any problems and allows a Visa-affiliated monitor on site to oversee its operations in Tucson. CardSystems is also banned from handling Visa transactions from its international affiliates or any new merchants, processors or member banks in the United States.

Visa had been weighing the decision for a few weeks but as recently as mid-June said that it was working with CardSystems to correct the problem. CardSystems hired an outside security assessor this month to review its policies and practices, and it promised to make any necessary upgrades by the end of August. CardSystems, in its statement yesterday, said the company's executives had been "in almost daily contact" with Visa since the problems were discovered in May.

Visa, however, said that despite "some remediation efforts" since the incident was reported, the actions by CardSystems were not enough.

"Visa cannot overlook the significant harm the data compromise and CardSystems' failure to maintain the required security protections has had on member financial institutions and merchants as well as the significant concerns it raised for cardholders," the company said in a statement.

At this point, it is unclear what the other branded card companies will do. MasterCard has previously said that it was giving CardSystems a "limited amount of time to demonstrate compliance with MasterCard security requirements" but never laid out a specific timetable.

Sharon Gamsin, a MasterCard spokeswoman, did not return calls seeking comment. Judy Tenzer, an American Express spokeswoman, said the company did not comment about its relationships with vendors. Leslie Sutton, a Discover Financial spokeswoman, could not offer an immediate response.
Visa's decision is the latest development since the disclosure in mid-June that the CardSystems computer network had been compromised, putting the cardholder names, account numbers and security codes of as many as 40 million credit and debit cardholders at risk for fraud. The information of about 22 million Visa cardholders was exposed; MasterCard reported the data of 14 million of its cardholders was potentially at risk; and the rest largely belonged to customers of American Express and Discover.

At the time, Mr. Perry of CardSystems acknowledged that the company had been improperly storing data, violating Visa and MasterCard security rules. He said data thieves directly obtained information related to some 200,000 cardholder accounts. The F.B.I and a group of federal banking regulators are now investigating.
In its statement, Visa offered its most scathing indictment of those security violations to date. The chief executive of CardSystem had "stated that the company knowingly retained unmasked magnetic stripe cardholder data, purportedly for 'research purposes,' " Visa said. "Visa's security requirements were adopted precisely for the purpose of protecting cardholder information and guarding against the type of data compromise recently experienced by CardSystems."

In the letter Visa sent to the banks, Mr. Murphy suggested that the data breach occurred as early as August 2004.

Leftovers: Software

All the *mm projects now require C++11. Current versions of g++ require you to use the –std=c++11 option for this, but the next version will probably use C++11 by default. We might have done this sooner if it had been clearer that g++ (and libstdc++) really really supported C++11 fully.

I have just released version 1.13 of Obnam, my backup program. See the website at http://obnam.org for details on what it does. The new version is available from git (see http://git.liw.fi) and as Debian packages from http://code.liw.fi/debian, and uploaded to Debian, and soon in unstable.

MusicTube is a very interesting music player designed for multiple platforms using YouTube as the music source. It's not made for locally hosted music, and you can't add other online sources, but YouTube is a huge resource.

today's leftovers

Most of our services are in Go, and thanks to the fact that compiled Go binaries are mostly-statically linked by default, it’s possible to create containers with very few files within. It’s surely possible to use these techniques to create tighter containers for other languages that need more runtime support, but for this post I’m only focusing on Go apps.

Enabling Multipath TCP on the smartphone is the first step in deploying it. However, this is not sufficient since there are very few servers that support Multipath TCP today. To enable their users to benefit from Multipath TCP for all the applications that they use, KT has opted for a SOCKSv5 proxy. This proxy is running on x86 servers using release 0.89.5 of the open-source Multipath TCP implementation in the Linux kernel. During the presentation, SungHoon Seo mentioned that despite the recent rollout of the service, there were already 5,500 active users on the SOCKS proxy the last time he checked. Thanks to this proxy, the subscribes of the Giga Path service in Korea can benefit from Multipath TCP with all the TCP-based applications that they use.

On August 1, Artyom Zorin had the great pleasure of announcing the immediate availability for download of the final release of his Zorin OS 10 GNU/Linux operating system, distributed as Core and Ultimate editions, based on Ubuntu 15.04.

I’ve meant to do this for ages, so on my first day of my “staycation”, despite vowing to myself that I wouldn’t look at a computer screen this week (hey, it’s not actually the technical start of my week off is it?), I fiddled this morning with BIND to try and avoid seeing ads on my devices. While AdBlock works great on my browsers, that doesn’t transfer well to mobile devices and apps with built-in advertising, etc.

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